NEW DELHI, November 4: The 15 per cent sectoral cap on lending by financial institutions to the private sector for power projects will be removed soon. The finance ministry will shortly have a meeting with the heads of various financial institutions in this regard.

Significantly, prime minister IK Gujral has asked power ministry to clear all mega power projects including fast-track projects by the end of current financial year. The prime minister has also proposed setting up of a power trading corporation. This will be a central public undertaking which will buy power from big plants.

He has asked the power ministry to examine the feasibility of setting up this fully commercial organisation which will trade in power at the inter-state level.

Power minister Y K Alagh told reporters on Tuesday that the ministry would study the modalities of setting up such a corporation and would find out if laws need to be amended for the purpose.

After reviewing the private sector projects in a meeting with Alagh along with other senior officials from Planning Commission and the power ministry, the prime minister said that all counter-guarantee projects should be cleared by December.

Alagh said that in a meeting scheduled for next week the cabinet secretary will review all the private sector power projects whose clearance is held up either due to problems in finalisation of fuel supply agreement or because of non-availability of funds from the financial institutions.

The prime minister will shortly write to state chief ministers to ensure faster implementation of power sector reforms. Alagh also informed that the prime minister has asked the power ministry to prepare a review paper on conversion of naphtha-based power projects to gas-based projects.

Alagh said that in the meeting, it was also agreed in principle that the public sector power projects not seeking budgetary support can be approved without prior clearance from the concerned investment board.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.